LivingOS - Operating System for Your Life

Question Types: Estimation

Table of Contents

Know Your Stats

Here are some basic stats that would be handy in the estimation interview.

General Knowledge
1. 315 million people in the States
2. 2.5 people per household
3. 70 year life expectancy
Industry specific – Look up the market cap of your target industry
1. Online ads: $300B digital advertising spent worldwide
2. Ecommerce: $3.5T
3. Healthcare: $5T
Use the 80/20 rule: Identify the 20% area you should be spending energy on and deploy your resources on it.
1. 80% of traffic is on 20% of the roads
2. 80% of a company’s revenue is generated from 20% of customers
3. 80% of the product experience comes from the 20% of the UI

Once you know the basic statistics, try to derive a few on your own:

of college new grads = 300 M people / 70 life expectancy = 4.28 M new grads each year
storage is #users * #photos per user * #size
ads cost = click through rate * cost per click

Step 1 Clarify the intention
- Are you expecting an actual number or just thought process?
- Do I get any additional background information?
Step 2 Start making a few assumptions and write the assumptions on one side of the whiteboard.
- “I’m going to list some assumptions and do the calculations along the way.”
- “I will first do a top-down analysis and double check it with a bottom-up one.”
Step 3 Do a top down analysis
- Start from the total addressable market (aka anyone who can afford it).
- Use the three core questions in How to Nail Your Design Interviews to define the niche.
Step 4 Do a bottom up analysis
- Start from the smallest unit
- Now is a good time to ask the interviewer: “If you approve, I’ll brainstorm solutions for this use case.”
Step 5 Usually the interviewer would ask you to do bottom up and top down. If there is any huge discrepancy, be prepared to explain why (go back to your assumptions!)